Trader Loses Over $100,000 on ERC-404 Token Purchase

An anonymous user, who had previously earned approximately $1.1 million from Pandora, lost over $100,000 on a new ERC-404 standard token. Analysts at Lookonchain highlighted this incident.

This trader who made ~$1.1M on #PANDORA spent 42.88 $ETH($113,672) of gas to buy the #ERC404 token $NO.

Unfortunately, he was rugged and lost the 42.88 $ETH($113,672)!https://t.co/UR0Zc4TQxS pic.twitter.com/C8EQrJWwhb

— Lookonchain (@lookonchain) February 13, 2024

On February 11, the trader earned $1.1 million from Pandora by purchasing a token for $113,200 and selling it for $1.2 million.

On February 13, he acquired the ERC-404 token No for 10 ETH, paying a fee of 42.88 ETH ($113,672). However, an error occurred during the contract execution resulting in the loss of all invested funds.

Experts from HAPI suggest the issue could stem from either a software bug or the fraudulent nature of the token itself.

“In its 45 days of existence, the contract has completed only six successful transactions out of 602. There is no data on this contract on Etherscan — it has not been verified,” they added in comments to ForkLog.

The experimental ERC-404 standard is a hybrid implementation of ERC-20/ERC-721, where purchasing a coin also automatically generates an NFT in the wallet. It allows ownership of a fractional part of a so-called “fractional” non-fungible token.

ERC-404 has not yet been approved by the Ethereum Foundation or the community, and the official EIP page is unavailable at the time of writing. Moreover, the software code has not undergone any audits.

Amid interest in ERC-404, Ethereum network gas fees reached an eight-month high on February 9. On that day, the average rate was 70 Gwei (~$60 for a standard transaction), with a maximum of 377 Gwei.

Meanwhile, Pandora token developers announced on February 13 an upcoming protocol optimization aimed at reducing fees.

Many of you guys have been asking about optimization for ERC404 and how we plan on scaling and improving on the standard, so we thought we’d share some preliminary test results!

The following is still in development, so the numbers on release may look a little bit different -… pic.twitter.com/dfr2A0CrUr

— Pandora (@Pandora_ERC404) February 13, 2024

During the test launch, the team achieved:

• ~28% reduction in gas costs for minting;
• ~50% reduction in transaction costs.

However, gas burn costs increased by approximately 80%, which the team called “expected” since token identifiers are reused.

The developers will announce the implementation timeline later.

The price of Pandora at one point reached $32,493. This significant token growth brought another trader around $1.2 million in two days.

Meanwhile, the community raised concerns about the security of the new standard.